News Corp must change its structures and overhaul its corporate governance in response to unprecedented investor dissent, the Local Authority Pension Fund Forum (LAPFF) said today.

James Murdoch's future looks anything but certain after the disastrous voting round during the annual shareholders meeting last Friday in Los Angeles. The Murdochs only managed to stay on the board due to their controlling 40% of the shares in the company and the support of 7% shareholder Saudi Prince Alwaleed Bin Talal.

Of all the Murdochs, James saw the most votes against his presence on the board which schemes worried about the governance at the company now see as a clear sign that he should resign or be removed from the board.

Together with other pension funds, such as the Californian giants CalPERS and CalSTRS and the BT pension fund, the LAPFF voted against the existing board structure.

Following votes of 35% and 34% against James Murdoch and Lachlan Murdoch, LAPFF says it believes News Corp must refresh its board.

According to the LAPFF the results of this vote, though overruled by Murdoch's shares, should be enough for the company to change its structure and board members.

It says that when the Murdoch family's own interest in News Corp is accounted for it is clear that a large majority of independent shareholders voting at Friday's annual meeting do not support the existing board structure.

Forum chairman Ian Greenwood said: "These results show a clear desire for change amongst News Corp's shareholders. The level of investor opposition to certain board members is even higher than many had expected."

Ahead of Friday's meeting, the LAPFF had issued a voting alert to its members recommending that they oppose the election of James Murdoch and Rupert Murdoch.

Christian Brothers Investment Services (CBIS), a socially responsible investment firm, also introduced a failed floor resolution calling for the separation of the CEO and chair of the board positions at News Corp. This resolution was also supported by the LAPFF.

Julie Tanner, assistant director of socially responsible investing at CBIS, said: "The purpose of our resolution was to ensure that an independent voice with an independent view is leading News Corp. Ethical lapses appear to be endemic to News Corp, and not just a single, isolated incident."

She added that the resolution was meant to ensure the company operated in accordance with the highest standards of corporate governance and transparency.

News Corp has been on LAPFF's Global Focus List of companies with poor corporate governance practices since 2009. The Forum stepped up its engagement with the company after the multiple phone-hacking allegations appeared this summer.

The final results of the voting at the annual meeting were yesterday filed with the U.S. Securities and Exchange Commission (SEC) by the company.

In an address before voting, Murdoch expressed little concern for the pension funds' words of protest against the much reported practices at the controversial company.

Speaking to his shareholders, Murdoch spoke of being on "a remarkable journey... a journey that is still in its early stages". He also said News Corp was "the stuff of legends".

Only a short amount of time was dedicated to acknowledging the recent storm the company found itself to be in the middle in. Referring to the phone hacking scandal, Murdoch spoke of attracting "a certain amount of attention".

Distancing himself and journalists working for the former News of the World from the affair, Murdoch said he took "what has gone on in London" seriously.

25.10.11

azeevalkink@wilmington.co.uk